Despite not being a member of the OECD, South Africa remains a frontrunner in applying the BEPS recommendations to its tax regime. The authorities have taken steps towards even further implementing the measures while advisers continue to face the difficulties presented by the project. "I think South Africa is slightly ahead of the curve, which is a little strange since we are not a member of the OECD. But our tax authorities work very closely with the OECD," said Anne Bennett, head of tax at Webber Wentzel.
Advisers report that because of the continued uncertainty about the legislative impacts of BEPS, it is difficult for companies to apply the measures because of the lack of guidance from the authorities. This has resulted in advisers reviewing structures and justifying the current planning.
South Africa has legislation addressing hybrids in place, although the Davis Tax Committee (DC), an expert group, has examined the tax framework and recommended simplifying hybrid instruments legislation. Its CFC rules are complex and unclear in various respects, however it is uncertain whether South Africa will make any changes to them. In December 2015, the South African Revenue Services (SARS) issued a draft notice on transfer pricing documentation and country-by-country reporting (CbCR) came into effect from January 2016.
"One of the key components of the tax relationship between taxpayers and authorities is that one requires certainty," said Emil Brincker, head of tax at Cliffe Dekker Hofmeyr. "Given the various measures that have been implemented, this may be one of the areas that is lacking, apart from the additional complexity that has been introduced."
A special voluntary disclosure programme has also been introduced, which will last from October 1 2016 until March 31 2017. The programme includes both relief in terms of tax and contravention of exchange control provisions.
These changes, along with the increasingly aggressive SARS, has caused uncertainty for taxpayers. Advisers report an increase in tax audits as well as a new demand for companies to get to grips with the changing environment. "South African multinationals are very much trying to get to grips now with what this actually means for them," said Bennett. "We've definitely seen an increase in the level of inflexibility from the tax authorities and it is clearly an agenda that they have to try and collect funds."
Advisers also reported that the South African economy is not doing as well as they had hoped. "A lot must be said about the lack of growth, or the limited growth, in the economy. That has impacted business in general and tax consulting services in particular," said Nazrien Kader, head of tax at Deloitte.
Over the past few months, investment into South Africa has declined substantially because of a number of factors such as government policy, labour unrest and uncertainty as to the country's credit rating. "From a corporate perspective, the tax rates in South Africa applicable to corporates, of 28% is relatively high compared to its counterparts even though specific incentives have been introduced pertaining to so-called headquarter companies, domestic treasury management companies and venture capital companies," said Brinker. "Overall, a wait-and-see approach has been adopted to establish whether the South African Government will implement all of the various proposals so as to avoid a potential downgrading by the rating agencies."
1 Protea Place
Sandton, Johannesburg, South Africa
11 Buitengracht Street
Cape Town, South Africa
Tel: +27 (0)11 562 1063
Cliffe Dekker Hofmeyr's Tax and Exchange Control practice provides advice on a wide variety of tax related matters, both in the local and international context. We provide tax planning as well as tax structuring and transaction related services. We are also actively involved in tax dispute resolution and we assist clients in resolving their disputes with the South African Revenue Service. A number of our clients' disputes have recently been heard in the Tax Court and the Supreme Court of Appeal. We also keep our clients informed of anticipated changes in tax laws and practice to help them manage and take advantage of developments on the tax front.
We work on tax matters on an individual basis, or as part of a team of lawyers from across our firm's practice areas in corporate transactions. We are therefore able to provide a commercially integrated service in order to ensure efficiency from inception to implementation. We are also actively involved in obtaining advanced tax rulings and also customs/excise tariff, valuation and origin determinations for clients and are able to move quickly and seamlessly on cross-border transactions. We coordinate information and resources to achieve your corporate objectives in the most tax efficient manner, wherever you do business.
ENSafrica is the largest law firm in Africa and the only one that offers the full spectrum of tax advice throughout Africa.
ENSafrica's services include advising on the expansion of large multi-nationals into Africa, as well as on in-country tax and regulatory structuring compliance, and identifying and minimising risk.
ENSafrica heads up the sub-Saharan African hub of international tax network, Taxand.
Bernard du Plessis: + 27 11 269 7600, bduplessis@ENSafrica.com
Peter Dachs: +27 21 410 2500, pdachs@ENSafrica.com
Ernst & Young Advisory Services (Pty) Ltd
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|Corporate Income Tax||28%||A|
|Capital Gains Tax||18.648%|
|Net Operating Losses (years)|
|Royalties from, for example, patents, know-how||15%||D|
|Branch Remittance Tax||0%|
Bowman Gilfillan's tax department is led by Alan Keep. He has expertise in tax advisory and supports clients in capital markets, banking, oil, gas and renewable energy, and telecommunications. The team of specialists has a comprehensive understanding in South African and international taxation and has expertise in cross-border M&A, dispute resolution and tax litigation.
Keep's clientele includes SABMiller, The Coca-Cola Company, Anglogold Ashanti, Marsh and Ericsson.
Emil Brincker is head of tax at Cliffe Dekker Hofmeyr supported by a team of five partners and eight professionals. Brincker has experience in corporate law and is able to assist in various aspects of tax including VAT and indirect tax, restructuring, private equity and corporate finance. The team of professionals offers an array of tax services and has expertise in advising clients on tax matters relating to operations within the financial, mining and retail industries. It also has knowledge in local and international tax planning, cross-border transactions and dispute resolution.
The firm has recently expanded to include customs and private equity and has expertise in transfer pricing and litigation.
Nazrien Kader is the national taxation service leader and heads the tax practice at Deloitte South Africa. The team comprises 34 partners and 280 professionals across South Africa including accountants, lawyers and science, technology engineering and maths (STEM) professionals who offer insight across industries. The full service firm assists clients on matters relating to corporate and international tax, compliance, transfer pricing, M&A, cross-border structuring, research and development, VAT and indirect tax and litigation.
Kader has been with Deloitte for more than 18 years and is a specialist in corporate income tax, advising a range of corporates in the financial industry on a range of income tax issues.
The team is integrated into the global network and Deloitte South Africa is the largest tax practice in the Deloitte Africa member firm. The worldwide network keeps updated on the latest changes and the professionals provide tailored tax solutions and insight across business tax, indirect tax, cross-border tax, tax data analytics and global employer services.
This year one of the team's prominent deals included the implementation of tax analytics signature solutions at key target clients which included tax dashboard, tax risk register and optimised tax reporting packs.
ENSafrica, Taxand South Africa comprises a tax department of 46 professionals, including 18 partners. The team is headed by Bernard du Plessis and Peter Dachs and offers a full range of tax services including M&A, financing, investment structures, property finance, corporate structuring, inbound and outbound investments, human capital, VAT and other indirect taxes. The practice also advises large multinationals on the expansion into Africa and has experience in transfer pricing and dispute resolution.
The breadth of the team's expertise is reflected through its clientele which features both South African and international companies from various industry backgrounds such as financial services, mining, real estate and energy.
This year, ENSafrica advised on the tax and exchange control implications in relation to the separation of the business of the BHP Billiton group of companies into two distinct portfolios. This involved the retention of the core assets of the company and the implementation of a demerger and unbundling to shareholders of the firm.
The tax team, this year, expanded with four new professionals: Carli Aldrich joined from PwC, Kristel van Rensburg from Glencore South Africa, Refilwe Mashale from EY and Ntebaleng Sekabate from KPMG.
The firm was established more than 100 years ago and is one of the largest law firms in Africa with 600 practitioners and offices in Ghana, Mauritius, Namibia, Rwanda, South Africa and Uganda.
The tax practice at EY is led by newly appointed head of tax Lucia Hlongwane. She joined the firm from Barclays Africa Group where she was head of tax and has previously worked for Shell as Africa head of tax. The tax team provides the full suite of advisory services including cross-border tax assistance, compliance services for multinational corporations, business structuring and tax accounting.
Managing partner Blaize Vance leads the tax practice at Fasken Martineau DuMoulin, which provides tax support to clients across a range of industries including business activities. The team of professionals has extensive experience supporting clients operating within the renewable energy, infrastructure, mining, banking and finance industries.
The service offering includes transfer pricing, VAT planning, personal income, wealth management, tax litigation, dispute resolution and international tax planning.
The tax team at Glyn Marais offers a range of services, advising financial institutions, large corporate clients and private clients in tax issues relating to global structuring, cross-border transactions and M&A. Richard Glyn leads the practice and is a tax specialist with knowledge in domestic and international tax and has a further understanding of VAT, capital gains, income tax, corporate tax and finance.
Eugene du Plessis leads the Grant Thornton tax division in Johannesburg. The team advises on a number of tax activities for domestic and international clients with focus on compliance, corporate, VAT and indirect tax. The team advises clients on a number of industries with particular strength in the mining sector. The firm has conducted various tax investigations and accrual reviews and advises companies on restructuring and private equity transactions.
Based in Johannesburg, the tax department at Hogan Lovells offers a full scope of tax services, with focus on assisting real-estate clients. The team has expertise in all aspects of tax including transfer pricing, VAT planning and customs planning, tax disputes, international tax structuring and investment fund management. The practice is headed by Ernie Lai King, supported by partners Natalia Napier and Jackie Peart.
Alan Field heads the tax and legal practice at KPMG South Africa. The team comprises professionals with expertise in tax, audit and various areas of business advisory. The team assists domestic and international clients through an array of specialisms such as accounting, finance, science and engineering.
The firm supports clients with a range of services such as corporate and international tax planning, business structuring, litigation, and diagnostic tax analysis and dispute resolution.
Norton Rose Fulbright's tax team provides a wide range of tax support to clients across all sectors, with focus in corporate M&A, corporate structuring and indirect tax. Andrew Wellsted is the head of the team and has experience across a range of transactions relevant to the practice's corporate client base, particularly the international, banking, M&A fields.
The tax team at PwC is overseen by Paul De Chalain. The professionals have vast experience in tax, law and accounting and offer a wide range of services including corporate tax, international trade, transfer pricing, dividends tax, global compliance and tax support with employment solutions and pension schemes.
Anne Bennett supervises the team of 10 partners and 19 professionals at Webber Wentzel. The firm is recognised for its abilities in the area of corporate tax, international tax and dispute resolution. The corporate and M&A team is headed by Elandré Brandt and Brian Dennehy, with Nicole Paige and Dennehy jointly leading the private equity fund tax offering. The tax dispute resolution team is overseen by Nina Keyser, it handles high value disputes for many of South Africa's leading multinational companies.
The team has a wealth of experience in providing tax support to various industries including mining and metals, banks and financial services, retail, construction and materials, insurance and telecommunications. It offers advice across all aspects of tax, including corporate and international tax, financial structuring, tax disputes and transfer pricing.
This year, the team expanded with a number of new hires including Kyle Beilings who has significant experience advising on the tax aspects of M&A and structures finance related transactions. Paige also joined the team and specialises in advice on the formation of alternative investment funds and has advised local and international private equity and venture capital houses looking to raise funds for deployment in South Africa. To assist Paige, Gitte Truter also joined the team and has experience in corporate transactions.
Director Ernest Mazansky oversees the tax team at Werksmans Attorneys. The tax professionals offer practical advice to public and private clients, with emphasis on M&A, private equity, black economic empowerment transactions and corporate reorganisations.
The team's experience is extensive and includes international taxation and inbound and outbound investment, applying a comprehensive knowledge of international tax rules and possible exchange control implications. The professionals also assist on domestic tax such as income tax, withholding tax, capital gains tax, employee tax, VAT and securities transfer tax.